PAOGA - Privacy & Trust in the Digital Age

September 29, 2009

There is an emphasis in the marketing literature on data-mining as a facilitator of customer-centricity and competitive advantage. It is tempting to assume that benefits flow automatically to both buyers and sellers from ICT solutions (indeed the term ‘solution’ is axiomatic). This study examined the concepts of trust and trustworthiness in the e-commerce environment in relation to vendors known / not known to consumers and finds serious concern amongst consumers about the security, privacy and confidentiality of their personal data.

This study contributes to understanding consumer concerns about data protection in the online domain by:

• Exposing a high level of consumer concern over the requirement to provide personal details when shopping online;

• Indicating a need for immediate action to improve the security of customers’ personal data, and to provide assurance of the same;

• Revealing the importance of providing an ‘opt-out’ facility;

• Exposing the extent to which consumers need reassurance about data security, whether or not they have experience of the vendor offline;

• Enhancing understanding of the key role of website design and process functionality in perceived trustworthiness of vendors;

• Indicating that there is a high level of interest in the concept of a ‘digital security box’ motivated by a desire to eliminate unauthorised access to personal data.

Our findings suggest several managerial implications. We find that consumers are extremely concerned about the security, privacy and confidentiality of their personal data, whilst the literature (and media coverage) suggests that companies are failing to respond appropriately. Vendors need to take consumer concerns much more seriously and respond more proactively, for example, by encrypting data as a matter of course, storing data in one place, encrypted, protected by digital keys and with strict policies regarding replication. For consumers, ‘opt out’ should be the default unless they specifically, actively opt in to their data being shared or sold in return for some reward. All non-essential data should be deleted automatically, and personal data should be stored strictly according to data protection legislation. Data security can be a valuable source of differentiation, yet online vendors do not yet appear to be fully cognizant of its importance. We call for companies to take data protection much more seriously. We call also for the government to be more proactive in ensuring that consumer data is protected by strengthening data protection regulation and improving monitoring and audit activities.

This research has several limitations that point to future research directions. While our study focuses primarily on measuring trust and trustworthiness, future research could also measure consumers’ risk averseness and perceived self-efficacy in using ICT as both potentially could be intervening variables. Also, future research might explore the difference in the effect of trust between online stores that sell high and low-end products and different types of e-tailers such as pure play e-commerce sites, ‘bricks and clicks’, discounters, aggregators, mall-based stores and so on. We predict that the protection of consumer data will become an increasingly high profile issue that Web 2.0 applications proliferate and it behoves vendors to respond appropriately. We see a pressing need for more academic research in this field to provide empirical evidence to inform and support vendor responses. Despite the limitations of our study, we see it as an important addition to the marketing literature on trust in the e-commerce domain. As intimated, trust is a cornerstone of e-commerce activity; without it there would be no online transaction. Vendors need to remember that once broken, trust cannot be easily repaired; to misquote Abraham Lincoln, ‘If you once forfeit the confidence of your customers, you can never regain their respect and esteem’.

Extracted from Safe In Their Hands 2009 Research Paper from University of Surrey / PAOGAI have emboldened what I believe are key points.

It's getting colder and cloudier for Friday night when I will sleep (?) in a field (no tents) in Thames Valley. Of course this means nothing to the 75,000 under 25's who have to sleep rough every night all over the UK. Your donation at www.justgiving.com/paoga will really mean something for those that Action for Children help to get back on track. Thanks in anticipation. Graham

September 18, 2009

Introduction to the 40 page results of the academic research carried out in 2009 which is under review by an academic journal.

E-commerce continues to expand, but there is evidence of increasing unease amongst consumers over vendor commitment to data protection. This paper investigates consumer concerns about data security in the e-commerce domain and identifies the antecedents of i) perceived trustworthiness of unknown vendors and ii) trust in known vendors. The findings of our web-based survey reveal a high level of concern over data security and confidentiality and a lack of conviction that vendors are doing all they can to protect personal data. Website and process design along with explicit assurances that data will be protected are identified as antecedents of perceived trustworthiness of unknown vendors, whilst assurances and the ability to opt out of data being sold or shared influence trust once the vendor is known. We find that consumers would like to manage their own data, suggesting the prospect of first-mover advantages for companies adopting VRM (vendor relationship management) strategies.

AUTHORS:

Dr Ailsa Kolsaker is a Lecturer in Marketing and eBusiness in the postgraduate Management School, University of Surrey. Her interests lie in the application of new technologies to marketing. A Member of the Chartered Institute of Marketing and the Academy of Marketing’s e-Marketing Special Interest Group, she is currently leading research into consumer responses to mobile marketing and consumer concerns about data protection in the online world. She is also involved in researching the prospects for leveraging Web 2.0 to promote user-generated and co-created content.

Graham Sadd is Founder and CEO of PAOGA Ltd. which provides Personal Information Management Services (PIMS). Previously he was Founder and CEO of Infobank Plc (rebranded Izodia Plc) developing a B2B e-procurement enterprise solution. He has also founded and managed a number of businesses in the communications and publishing industries spanning graphic design, advertising, marketing, international book publishing, early electronic publishing, software development and international software publishing. Throughout his working life Graham has worked to exploit technology to automate repetitive tasks on the principle that People Are Our Greatest Asset.

September 15, 2009

Have stories of scandals and wrongdoing created a crisis of trust in society?

Yes, of course it has and the implications for relationships will be significant.

A global poll in January 2009 of 14,555 people showed UK citizens as being among the most pessimistic and least trusting.

David Chadwick of Kent University raised a provocative issue in a keynote presentation in Maastricht in October 2008. To paraphrase "Communities [cultures, nations, industry sectors] with a high degree of trust [he mentioned UK, USA] develop 'big' businesses. Communities with lower trust cultures [France, China, Sicily] tend to be more insular."

Peter Murton of PAOGA said "Trust is the foundation for all successful business ecosystems and it is fundamentally missing from the online environment. The success of the VRM [Vendor Relationship Management] movement will pivot around the development of system architectures that deliver mutual trust between the individual and business. Individuals should understand that this comes with responsibilities: to maintain accurate data about themselves and to work at establishing policies for the use of their data on a case-by-case basis maybe. Business should understand their role in complying with user policies and be prepared to invest in the creation of the biggest successful business ecosystem on the planet - the internet."

The media have repeatedly uncovered serious data breaches of corporate and public data silos resulting in a huge increase in identity theft and fraud.

The government have contributed to the problem by creating a climate of fear and distrust in society as a whole.

These and other events are changing the mindset of UK citizens who are rejecting conspicuous consumption, saving rather than spending, buying what they need rather than what they want, downsizing houses and cars, mending rather than replacing.

The Global Market does not seem to be the answer. Perhaps it’s much closer to home.

•80% of UK GDP is generated by SMEs

•80% of SME customers are within 30 miles

•80% of the population live within 30 miles of their place of birth

Using the web to recreate the local community rather than the global village makes sound economic sense.

Using local service providers and buying fresh seasonal goods locally reduces transportation costs, unnecessary packaging and creates employment positively contributing to the Health, Wealth and Happiness of the individual, their family and their community.